Aeropostale Inc ARO.N shareholder Crescendo Partners urged the company to sell itself, joining a list of investors going public with their frustration about the fading fortunes of the teen clothing retailer after three quarters of losses.
The New York-based private equity firm said Aeropostale had a strong brand name and a compelling valuation that made it attractive for a buyout.
"We urge the company to set up a special committee of independent directors and hire investment bankers to run a broad sale process," Crescendo said in a statement on Thursday.
It was not immediately clear how many Aeropostale shares are held by Crescendo, and executives at the investment firm were not immediately available to comment.
Aeropostale shares, which have fallen about 40 percent in the past six months, were up 3.5 percent at $10.38 in early trading on the New York Stock Exchange.
Dallas-based private equity firm Hirzel Capital Management LLC, which holds about 6 percent of Aeropostale, said on Tuesday it wanted to open discussions with the board that could lead to "an extraordinary corporate transaction."
Hummingbird LLC, an affiliate of Aeropostale shareholder Sycamore Partners Management, disclosed an 8 percent stake in September.
Sycamore has a history of taking troubled apparel retailers private. The firm took teen clothing retailer Hot Topic Inc private earlier this year and bought women's apparel chain Talbots Inc in 2012.
A Sycamore spokesman declined to comment on the statement by Crescendo, which also said it intended to nominate directors at Aeropostale's 2014 annual shareholders' meeting.
Aeropostale has been trying to offer more fashionable products in addition to hoodies, jeans and t-shirts, but the company's efforts done little to turn around its fortunes.
Aeropostale is scheduled to report third quarter results on December 4. The company has already said it will report a loss, largely because of heavy discounting among clothing retailers as they headed into the holiday shopping season.
(Additional reporting by Aditi Shrivastava; Editing by Joyjeet Das and Ted Kerr)